September 25, 2020
Reasons You Should Raise Financially Responsible Children
By : Ellie Brown
As a parent, you want your ward to be perfect and full of confidence. When it comes to finances, parents might want to keep their children away from the stress of managing and saving money. However, it is advisable to make your child financially responsible as soon as he/she reaches the age of 10 or when you see your kid responding smartly to his/her environment.
Letting your kid understand the importance of money, the hard work that goes behind earning it, and allowing them to make an allowance by helping you out in some chores is significant and valuable for their upbringing. Nevertheless, so you know, it is not that easy task. It takes a lot of patience and the right method to be successful at this task. Trust us; doing this will be beneficial for your child in the long run and a way for him to have the confidence right from the start.
We understand that you don’t want your ward to indulge in the adult stress of saving money, investing it, and planning the financial future, but you can start with the basic concepts. Tell them how you pay your bills, say electricity, water, cable, loans, etc. followed by groceries and other essential things. Tell them how you save money for a better future. Let us dive in detail and get to know how well can make a child financially responsible:
The concept of spending, saving and investing money
For teaching your child about managing money, you need to make them understand the three concepts – Spending, Saving, and Investing. Label three jars with these terms and put money inside to teach them how important each of them is. You can also give them some tasks to make them understand about these three things easily. Indulge them in doing some chores like mowing the lawn, cleaning their room, wash cars, walk the pet, watering plants, washing some dishes, etc. After that, pay them their allowance and ask them to divide the money into the three jars.
Take them with you for giving a practical example
Whenever you are required to visit your bank for any work, take them with you. Teach them how things work there and how you manage them. You can also open a savings account for them as many banks offer this service for a child with a minimum balance. Teach them how money can increase with interest leading to a significant amount in the future.
You can also sometimes take them to shop with you. Tell them how you can use vouchers or coupons to save some money or how you can shop while the stores are on sale. This way, you can make them understand how the money saved today can lead to a brighter future.
Teach them the value of compromise and mistake
While making them earn allowance is a good thing, but we know as adults that mistakes happen and it is okay to make them. Nevertheless, it is more important to understand the negative consequences of those mistakes and how not to repeat them. Example – They lost the money you gave to them, or they used the money you gave to buy something else from the nearby store for the house instead of what you asked them to. Consider this as an opportunity to make them understand their mistake and what negative consequences any such thing can have.
Teach them that everything costs money and how one has to sacrifice something to get something else. Give them practical everyday examples. It is crucial to make them understand what should be a priority and what can wait for some time. In addition, it includes teaching them to use money reliably.
Importance of Saving Money
While we might have understood this later in life that how saving can be essential for us. We sometimes might feel that it would have been good if we had known this earlier. To spare your child from having this feeling in the future, teach them all about the right ways to invest money in Fixed Deposits, introduce them about stock markets, and tell them the advantage and disadvantages of it.
You should also take an opportunity to introduce them to loans – long term and short term that can be borrowed from either banks or private lenders like Fortnitemoney. Banks are considered a perfect choice for different kinds of long-term loans like home loans, personal loans, or car loans. Private lenders also provide 100% guaranteed loans either long term or a short term like payday, door to door, or easy loans.
Teaching kids about managing finances and how to become financially responsible is a critical step to shape them in a responsible adult. Values, compromises, and mistakes are all part of life, while some things are taught at school, but no education can beat parent’s teachings.